Residential Real Estate; Luxury Hotel on Park Is to Become 65 Co-op Units

By RACHELLE GARBARINE

Published: May 14, 2004

The prewar building at 112 Central Park South opened in 1927 as a residential hotel and later became a stopping place for deep-pocketed travelers as a Ritz-Carlton and ultimately as part of the InterContinental chain. Next month, it is scheduled to begin its transformation back to permanent housing, this time as a 65-apartment co-op.

The interior of the 25-story structure, which will cease operating as a 208-room hotel this month, will be stripped to its structural steel and reshaped into the apartments, each with one to three bedrooms and 1,000 to 2,365 square feet, according to the developer's plans. Some apartments may be larger. The ground floor is to have 5,500 square feet of retail space.

The building will grow slightly, to 28 stories, as a floor is added. The existing top two floors, now used for building systems, are to be converted into housing, said Stephen L. Glascock. Mr. Glascock and his wife, Barbara van Beuren, are both architects and are the principals of Anbau Enterprises of Manhattan, the developer.

The building, designed by James E. Carpenter and Rosario Candela, is between Avenue of the Americas and Seventh Avenue. Its classic limestone facade will be cleaned and given new windows.

''It is a huge opportunity,'' Mr. Glascock said of the conversion, which is expected to take 15 months to complete. Costas Kondylis & Partners is the renovation architect.

Funds for the $110 million project, which includes the cost of acquiring the building, are being provided by iStar Financial and Corus Bank, said Arthur Fefferman, the president of AFC Realty Capital of Manhattan, which arranged the financing. The deal closed at the end of last month.

Newly constructed for-sale housing and the relatively few building conversions these days are both creating condominiums. But 112 Central Park South will break from that pattern by being marketed as a co-op, though without some of the restrictions normally associated with co-ops. The choice of the co-op form reflects an unusual landownership aspect of the deal, one that is expected to result in the apartments' carrying slightly lower prices than comparable residences in the area. A key reason No. 112 will become a co-op is that Anbau rents, not owns, the land beneath the building. Condominiums, unlike co-ops, must own the land under the building. Mr. Glascock said part of the eight-month negotiation to buy the old hotel involved extending the ground lease, held by Alice Kandell and Joan Gordon, to 99 years from 45. But the building, he added, will operate like a condominium; owners will not need board approval to sell or sublet their units.

Of the 2,500 co-op buildings in Manhattan, fewer than 5 percent have ground leases, according to the Council of New York Cooperatives and Condominiums. Real estate professionals say that such co-ops generally sell at a discount to compensate for monthly maintenance costs that tend to be higher than those in comparable buildings without ground leases.

Anbau was aware of that from its work on other conversions, including the creation of 25 co-ops in a former commercial building at 419 West 55th Street, between Ninth and 10th Avenues, that also involved a ground lease, Mr. Glascock said.

Mr. Glascock said he intended to offer a slight discount for the apartments at 112 Central Park South, as he initially did at the 55th Street project, which will be completed next month. But he said the 55th Street apartments, 80 percent of which have been sold, ultimately fetched market prices.

He said prices at 112 Central Park South have not been set, but are expected to range from $1 million to $5 million. Sales are expected to start by the end of the year.

Louise Phillips Forbes, a senior vice president at Halstead Property, said that since December 162 residences had sold on Central Park South, of which 45 fetched $1 million to $14 million.

Prices are higher at newer nearby projects. One is 50 Central Park South, where 7 of the 12 condominium apartments above the present Ritz-Carlton Hotel, formerly the St. Moritz, sold for $15 million to $25 million and the remaining five are on sale for $12 million to $28 million, said Matthew Hall, a spokesman for Millennium Partners, the developer.

Those prices, said Ms. Phillips Forbes, indicate that there will be a market for the apartments at 112 Central Park South. But, she said, sales will depend on the monthly carrying costs.

Mr. Glascock said he would explore several options to keep monthly costs at a competitive $2 to $2.50 a square foot for that area. At that rate, the initial monthly maintenance cost, including the rent to lease the land, on an average two-bedroom with 1,850 square feet would be $3,500 to $4,500.

Mr. Fefferman, of AFC Realty Capital, added, ''The length of the ground lease and the building's world-class location will override any buyer resistance.''

Photo: The InterContinental Central Park South building opened as a residential hotel in 1927.